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What is the expected return on a portfolio comprised of $3,000 in stock K and $5,000 in stock L if the economy is normal?

What is the expected return on a portfolio comprised of $3,000 in stock K and $5,000 in stock L if the economy is normal?

State of Probability of Returns if State Occurs
Economy State of Economy Stock K Stock L

Boom 20% 14% 10%
Normal 80% 5% 6%

Solution Summary

The computation is shown step-by-step for you.

$2.19